Booming house prices mean the old are getting richer while the young struggle, says Bank of England deputy
Alright for some: Downsizing older people charge huge sums for properties thanks to the price surge
Booming house prices have boosted older people’s wealth at the expense of the young, according to a top Bank of England official.
Downsizing older people charge huge sums for properties thanks to the price surge, the Bank’s deputy governor Ben Broadbent said.
This has forced first-time buyers and those with growing families to take out vast mortgages.
Broadbent said the Bank’s steep cut to interest rates after the crisis made a large mortgage cheaper. This meant customers put in higher bids, driving asking prices through the roof.
And young people have been saddled with massive debts as the older sellers raked in vast sums.
At a speech in London, Broadbent said: ‘This is the inevitable result of the boom in house prices in the early years in the last decade.’
The claims will fuel critics who claim that ultra-low interest rates just mean the rich get richer at the expense of those who do not have wealth.
Just one in four average earners aged between 25 and 34 now owns a home, according to the Institute of Fiscal Studies. In 1995, two-thirds did.
Broadbent also warned a sharp rise in high-risk lending to businesses has worrying parallels with the sub-prime mortgage disaster that triggered the financial crisis.
But the Bank believes Britain is much better placed to deal with problems.